CEI Planet - September-October 2011

8/3/2019 CEI Planet - September-October 2011

1/12

Competitive enterprise institute volume 24, number 5 september/oCtober 2011

Featured articles

also inside:Malcom Wallop, Stand-Up Guy, R.I.P., m e

What Works for Business Works forGovernment, Right? F l s,

t G, b, ug

m m

e n

Cei thanks pro-worker ConGressmen

>>page 8>>page 5

by vClav klaus

I

remember quite vividly my previous

encounter with the Competitive

Enterprise Institute (CEI)a speech in May

2008 devoted to my Czech compatriot and

great economist Joseph Alois Schumpeter

and his views about the end of capitalism.

My feeling was that we believed that

Schumpeter was wrong in his pessimism

and that, in spite of the many threats we saw

around us, capitalism would survive.

I also remember CEI honoring me with

the Julian Simon Award. Julian Simon

was an optimist and one of the few fellow

economists who believed in capitalism,

who defended it, and who statisticallydemonstrated that capitalism had been

successful. I am convinced he was right.

In my speech at the recent Ambrosetti

Forum in Italy, I argued that Europe has to

get rid of the unproductive and demotivating

concept of the Soziale Marktwirtschaft(you

would call it the welfare state), which,

of course, was not greeted by the mostly

European audience there. The former

EU commissioner, Mario Monti, replied

that Europe needs a competitivesoziale

Marktwirtschaft, which is, of course, a

contradiction in terms, because these two

adjectives do not go together.

It motivated me also to think aboutthe reasons for your putting the term

competitive in the title of CEI. Do you

want to compete with other institutes?

Or does it mean that you are in favor of

competition? Perhaps something else? I was

not sure about it.

We fnd ourselves in a challenging era,

challenging for us in Europe, but I am

afraidsimilarlyfor you in America.

Both in Europe and in America, we have

experienced years of a very unimpressive

recovery that follows after an

unexpectedly deep fnancial andeconomic crisis. We know

that this crisis was

caused by a series

of well-documented

government failures

and that the crisis

was not a market

failure as it is

fashionable to argue

these days.

There is an undeniable

crisis of the whole concept of European

integration, the most visible tip of the icebe

being the Eurozone debt crisis.

We witness an evident, extremelyrapid economic rise of the so called BRIC

countries (Brazil, Russia, India, and Chin

and their neighbors, and their more and

more active participation and inuence in

world events.

We are confronted with a worldwide

mass hysteria connected with the totally

irrational global warming propaganda.

(continued on page

is Freedom n the Western

World Guaranteed?

murray: budGetreForms to save

Frezza:inFrastruCtureFollies

>>page 4


2/12

Ceiplan

pubhFred L. Smit

eoMarc Scrib

eo dIvan Osor

Cobug Nicole Cian

th Cei p ouch Com

e i o-mk

goc o

m gov

Cei o,

of ogzcoo

h dcCoumb cf by

irs 501 chy Cei uo cobufom foucooovu fuo amy b ov hbu o

pho:(202) 331-1

Fx:(202) 331-0

e-m:fo@co

issn#: 1086-3

CEI THECOMPETITIVEENTERPRISEINSTITUTE

WWW.CEI.ORG

Former Senator MalcolmWallop died on September14 after a debilitating illness

that had conned him to

his home near Big Horn,

Wyoming, for several years. He is survived by his wife,

Isabel, and four children and their families.

Malcolm was a hero of mine long before I knew

him, so it was a great privilege to work for him after

he retired from the Senate in 1995 and to become his

friend. He was unfailingly polite and considerate,

intellectually engaging, and entirely positive. Malcolmhad a healthy sense of his own worth, but entirely

lacked the swollen head that aficts many senators.

When Malcolm defeated a Democratic incumbent

in 1976, he came to Washington as an uncompromising

Cold Warrior and freedom ghter, but as somewhat

moderate on many domestic issues. While many

conservatives tend to drift toward

the center after a few years in

Washington (which is variously

described as growing in ofce

or, more accurately, selling

out), he was so appalled by how

Washington works that he rapidlybecame a hardcore conservative

across the board.

Besides being a leading advocate

for President Reagans aggressive

challenge to Communism, Malcolm

devoted much effort to the federal

lands and energy issues that are so

important to Wyoming and served as ranking Republican

on the Energy and Natural Resources Committee at the

end of his Senate career.

Malcolm often said that if government ownership of

land was the best way to protect the environment, then

we should have found a Garden of Eden in the SovietUnion after the Iron Curtain came down. Instead, there

was one environmental horror story after another. He

understood that secure property rights are the basis of

environmental stewardship as well as of freedom and

prosperity. That is why he became a leading advocate

of radical reform of the Endangered Species Act (ESA),

which is an ongoing failure for wildlife because it is a

continual threat to landowners.

In 1992, Malcolm led a Senate delegation to the

White House that tried unsuccessfully to convince

President George H.W. Bush not to attend the Rio

Earth Summit and not to sign the U.N. Framework

Convention on Climate Change. Malcolm saw clearly

that global warming was a contrived crisis designed to

put government in charge of the economy.

Following his retirement from the Senate, he

founded Frontiers of Freedom to continue working

on the issues he cared about. It was through my work

on these issues that I rst got to know Malcolm and

eventually came to work for him as policy director

at Frontiers of Freedom. I too grew up on a ranch

in the rural West and had the same kind of rsthandexperiences of the disastrous management of our

federal lands.

Malcolms strong libertarian streak made him an

admirer of CEI. As Chairman of Frontiers of Freedom,

he worked closely with CEI to oppose the global

warming movements energy-rationing agenda, to

reform the ESA, and against the

endless cascade of nanny-state

regulations aimed at controlling

every aspect of our lives.

Malcolm commanded attention

by the power of his thought and

the elegance of its expression. Askilled and dedicated legislator

and a fearsome debater, he brought

intellectual clarity to every issue

Malcolm was both rural

Westerner and sophisticated

cosmopolite, comfortable with and

interested in all sorts of people.

Malcolm was a great conservative leader because he

was principled, passionate, and courageous. He fought

like hell for what he believed in. He loved America and

what it stands for. He thought that being an American

citizen was a great honor, and consequently he detested

the modern devaluation of citizenship that allowsgovernment to treat citizens as subjects.

Perhaps Malcolms central motivating force was

his reverence for the Constitution. He often said that

the problem with the Senate is that too many of his

colleagues view the Constitution not as the guide star

for their conduct, but as something to be got around.

Malcolm never succumbed to such temptation. In

his own political conduct, he was always guided and

restrained by the Constitution and Americas tradition

of ordered liberty.

Malcolm Wallop, Stand-Up Guy, R.I.P.by Myron Ebell

>>FrOM the directOr OF the center FOr enerGy and envirOnMent


3/12WWW.CEI.ORG

CPLANETAD VAN C IN G L IBER TY FR OM TH E EC ON OMY TO EC OL OGY

Freedom in the West, continued from page 1We are not successful when it comes to

blocking attempts to get rid of traditional

democracy (which is connected with the

institution of a state) and to replace it withglobal governance organized by experts

and public intellectuals chosen without any

democratic accountability.

Our criticism of all that is silenced by

the aggressive imposition of the tyranny of

political correctness, which is nothing else

than a misnomer for ofcially sanctioned

hypocrisy.

In comparison with my life under

Communism, I live in an innitely better

world now, but it is a world that is more

disappointing than I had expected it to be

in the moment of the fall of communism.My hope was to live in a more free and

liberal (in the European, not American

sense of the word) society than I see

around me now. Your country did not go

through such a radical transition, but you

may feel it similarly.

The movement towards a less free and

more controlled and administered society is

not the outcome of emergency endeavors.

As I see it, the problem lies in ideas,

in policies based on these ideas, and in

human behavior inuenced, motivated, and

justied by both these ideas and policies.

I am afraid of ideas and policies that

suggest that freedom and democracy

should be restrained in favor of higher

goods and values, that following private

interest is wrong, that public interest

should be dominant, that the politicians

act altruistically in the public interest and

know what it is, that the ordinary people

are not rational and moral and must be,

therefore, controlled, guided, and made

better by those who know what is good

for them. The result is a growing disbelief

in the power of free markets and ofparliamentary democracy, and a growing

belief in the omnipotence of state dirigisme

and in the omnipotent wisdom of public

intellectuals.

Environmentalism and a tendency

toward the denationalization of countries

and towards global governance are the

two most relevant threats to freedom and

democracy..

With respect to environmentalism, I do

not have in mind the practical and rational

debate about preventing environmental

degradation, which is no doubt ourobligation. I refer to environmentalism as

an ideology. Its adherents only pretend to

be interested in environmental protection.

In reality, they try to radically reorganize

and change the world, human society, all of

us and our behavior, as well as our values.

Especially in its current versionglobal

warming alarmismenvironmentalism

has become the most dangerous vehicle

for the suppression of freedom and for

the advocacy of large-scale government

masterminding of our lives.

The second issue that bothers me

is the accelerating move toward global

governance, which means towards

the weakening of the traditional pillar

of democracythe nation state. It is

very fashionable to argue now that

due to globalization, which means

internationalization of human activities,

we need global governance. I do not agree.

The fact that similar problems occur

in many countries does not mean that

they are global and that they should be

confronted by using less of markets and

more of governments. The unstoppable anbasically positive internationalization of

human activities doesnt ask for centralist

solutions.

The solution of the pressing problems

of our era doesnt lie in creating new

governmental and supranational agencies.

It is also not about the technicalities of

these solutions. It is about democracy

and democracy needs demos, democracy

needs citizens and citizenshipwithout

them democracy cannot be constituted.

We cannot have democracy at the

level of the European Union, with 27different nation states. Similarly, there

cannot be democracy at the level of the

world. It is possible to have an efcient

intergovernmentalism but not a democrati

worldwide supranationalism.

The recent problems with the euro

demonstrate it quite convincingly. When

I had been criticizing the concept of the

articially created European common

currency for the last two decades, no one

wanted to listen. It does not give me any

pleasure to see now that I was right. It

would have been better for meas for

someone who lives in Europeif I were

wrong.

Vclav Klaus is President of the Czech

Republic. This article is adapted from

a September 2011 speech delivered

by President Klaus to the Competitive

Enterprise Institute in Washington, D.C.

GlobalWarming.org

Dispelling the myths

of global warming

alarmism

OpenMarket.org

Empowering people to

take back their liberty


4/12


WWW.CEI.ORG

by iain murray

It has been more than two years sinceCongress passed a genuine federalbudget. So why can President Obama go

on spending so much more of our money?

The answer is that Congress can continue

spending without a budget. It passed sevencontinuing resolutions that allowed the

government to continue operating before

it nally agreed in April on a compromise

appropriations bill for the current year.

That deal runs out in September. Also

running out is the American peoples

patience with overspending.

Members of Congress are vacationing

at our expense. As soon as they return to

Washington, they need to start work on a

real budget for America that will x the

problems government causes. That means a

reduction in spendingand in bureaucracy.The rst thing a genuine reform budget

needs to do is retool the federal accounting

system so we know where our tax

moneyand the money borrowed against

our future tax paymentsis going. The

federal government does not produce either

prot or loss, so it doesnt use the tried-

and-trusted accounting tools that apply to

private businesses. Instead, it uses a variety

of accounting tricks and subterfuges that

would land the Treasury secretary in jail if

he were to try them in the private sector.

For example, the federal government

uses base-line budgeting, which

presumes spending increases every year.

Reductions from the base-line increase are

called cutswhich means government

bureaucrats complain about cuts when their

budgets actually go up. The compromise

appropriations bill cut government

spending by $38 billion but, in fact,

increased many government agencies

budgets by 10 percent or more. This is a

straightforward con job on the American

people. It has to stop. We need to know

whether our government is spending more

or less than the previous yearwithout any

trickery to muddy the picture.

Another example is the way the federal

government issues loans to itself via the

Federal Financing Bank. Those loans

do not appear on the government booksas spending increases, but they count as

spending reductions when they are paid

back. Then there are the budgetary activities

of off-budget agencies such as the U.S.

Postal Service and the Social Security Trust

Fund, whose various borrowings do not

count against the federal budget.

Transparency is key to bringing this

kind of shadowy spending under control.

Any future budget passed by Congress has

to include signicant reforms to the way

the federal government reports its scal

activities to taxpayers. Considering the

extremely onerous accounting regulations

it has imposed on private businesses, it

is only right that the governments own

accounting should pass muster.

The budgetary reforms should not stop

there. Congress should require a signicant

reduction in the burden government

imposes on our economy beyond taxes

regulation. The cost of the regulatory

bureaucracy in the United States amounts

to a staggering $1.75 trillion a year.

Yet bureaucracy keeps on growing justlike government spending. So far this year,

President Obama and his administrations

regulatory agencies have issued or proposed

389 new rules that would carry the force of

law, at a cost of $65 billion, and repealed

just onethe ludicrous rule whereby spilled

milk was treated like an oil spill.

Consider federal contracting rules,

which include Depression-era rules such

as Davis-Bacon, the federal prevailing

wage law that requires contractors on

federally funded construction projects

to pay what are essentially

union wage rates. This raises

costs for taxpayers by as much

as 20 percent. That means that a

community that needs to build ve

schools instead can build only four if

funding comes from the federal coffers.

Obama recently exacerbated that problemby issuing an executive order whereby al

federal projects were encouraged to use

project labor agreements (PLAs), which

effectively shut out nonunion contractors

thus raising costs. PLAs also can raise

costs by up to 18 percent.

This cannot continue. The next budget

should signicantly trim the federal

bureaucracy, as was done in the budget

deals of the 1990s. It should include

the provisions of the Small Business

Regulatory Freedom Act proposed by

Sen. Olympia J. Snowe (R-Maine), which

allows small businesses more access to

the courts to challenge damaging rules,

and the Regulations From the Executive in

Need of Scrutiny (REINS) Act, offered by

Sen. Jim DeMint (R-S.C.), which requires

congressional approval of regulations

costing more than $100 million. Virginia

Democratic Sen. Mark Warners proposal

that each new regulation be accompanied

by the scrapping of an old regulation also

should be part of the mix.

The whole point of public spendingshould be to secure value for the

taxpayers money. The current U.S.

federal budget system fails that test

utterly. The American people deserve a

budget, and they deserve one that respect

them more than bureaucrats.

Iain Murray ([email protected]) is Vice

President for Strategy and Director of the

Center for Economic Freedom at CEI. A

version of this article originally appeared

in The Washington Times.

Needed: Budget Reforms

to Save Money Into

the Future


5/12

by william Frezza

It was more tting than President Barack Obama could haveimagined when he invoked the memory of Abraham Lincolnsbacking of the rst transcontinental railroad in his bid to boost

his latest infrastructure spending stimulus. Its surprising that

his speechwriters let him do it, coming fresh on the heels of

the Solyndra bankruptcy, subsequent FBI investigation, and the

campaign donor scandal that is rapidly gathering steam.

Perhaps thats because no one in the administration ever got

past fourth grade history and the driving of the golden spike at

Promontory Summit. If they did, they would have known thatthe Union Pacic Railroad, organized by an act of Congress and

backed by millions in government 30 year bonds, went bankrupt

not once but twice. The story of graft, corruption, land grant

shenanigans, and outright bribery of U.S. Congressmen went on to

consume the Grant administration. And the folly of paying track-

mile subsidies led to the construction of an articially tortuous

route that maximized pork at the cost of operating efciency. That

boondoggle stands in direct contrast to the tremendous success of

the Great Northern Railroad.

Never heard of the Great Northern? Thats because they

dont teach about it in government schools. That transcontinental

railroad, completed in 1893, was the only one built entirely

with private money on privately purchased land, by a self-

made railroad tycoon, James J. Hill. Not only that, but by

building it in careful stages Hill kept the line protable

every step of the way. Many believe Ayn Rand got her

inspiration for Taggart Transcontinental in her novel,

Atlas Shrugged,from the Great Northern.

So we are repeating history in more ways than the

stimulus spenders let on, with a gusher of money

owing into crony corporations promising a

clean-tech cornucopia. There is a difference this

time, though. The outcome is going to be a lot

worse. While the rst transcontinental railroad

was a nancial disaster for both investorsand U.S. taxpayers, the line continued to

provide valuable service to customers

even after going into receivership.

Thats because no matter how badly the

politicians and nanciers screwed up

or how much money they stole to

line their pockets, taking the train

still beat covered wagons and

stagecoaches.

Can the same be said for

Solyndra, Evergreen Solar,

and SpectraWatt, once

providers of 25 percent of American solar photovoltaic output and

now on the bankruptcy scrap heap? Or the massive corn ethanol

infrastructure resting on a mountain of subsidies temporarily

shielded by protective tariffs? Or the struggling windmill busines

whose $2 billion in federal subsidies last year went largely to

overseas manufacturers?

All of these cleantech companies are building not geographic

monopolies for which few alternatives exist, but commodity

conversion businesses, whose economic viability is exquisitely

sensitive to shifts in both feedstock prices and energy alternatives

across global markets. As we let politicians play venture capitalis

with our money, can you think of any industry that offers more

competitive alternatives than energy?

The cleantech collapse destined to come after the next election

is going to be a spectacle to behold. As these turkeys go down

you can expect a parade of horribles when investigators nally

examine their books and follow the breadcrumb trails back into

politicians pockets. Having dodged that bullet myself I can tell

you exactly how the baksheesh machine works.

Several years ago, while sitting on the board of an internal

combustion engine startup, I had to nix a proposal to seek a

cleantech earmark. The respected K Street lobbying rm pitching

us gave us chapter and verse on how you can rent congressmen

and senators to gain multi-million dollar earmarks, completewith names and price lists. Ten thousand dollars bought the

support of a congressman. Twenty thousand bought a senator

These were campaign donations, of course, split into $2,000

checks written by ofcers and directors so as to dodge

campaign nance laws. I was aghast at how open the

whole process was, right down to the commissions

paid to both the lobbying rm and the federal agency

through which the funding was directed.

How many other directors of cleantech

companies said yes? How many scandal time

bombs are sitting there ticking, ready to go off

when these companies go down? How much

more crony capitalist corruption are Americanvoters going to put up with before they say

No Mas?

We have 14 months before we nd out

William Frezza ([email protected])

is a Fellow in Technology and

Entrepreneurship in CEIs Center

for Technology and Innovation. A

version of this article originally

appeared on Forbes.com.

Infrastructure Follies:

Railroads, Cleantech And Crony Capitalism

WWW.CEI.ORG



6/12


WWW.CEI.ORG

by Fred l smith, Jr and

JaCqueline otto

Law professors Frederick Tung of BostonUniversity and M. Todd Henderson ofthe University of Chicago recently asked

that question about the banking industry.They propose that bank regulators should

receive incentive pay linked to banks

performance. They argue that giving

regulators a stake in the success of the rms

they regulate will motivate them to make

better decisions. Freakonomics blogger

Matthew Phillips commented that Tung and

Henderson are essentially proposing giving

regulators stakes in the banks they

oversee, by tying their bonuses to

the changing value of the banks

securities. The proposal would

completely change the role ofthe regulator, from antagonist to

partner.

While this particular study is

new, the idea is not. Every so often

academics rediscover the superior

incentives that private companies

provide to ensure their employees

work to advance the central

mission of the organizationto

overcome what is known in

management parlance as the

principal-agent problem.

The principal-agent problem occurswhen individuals in a department of a rm

face incentives to pursue departmental

goals that conict with the overall goals

of the rm. For example, environmental

compliance ofcers have an incentive to

please environmental lobbyists and EPA

regulators. In other words, they face a

strong temptation to, as diplomats say, go

native. Firms need incentive structures to

motivate employees to resist and overcome

that temptation.

Tung and Henderson seek to quantify

and duplicate how private companies

accomplish this so that public agencies can

adopt similar structuresto advance the

public interest rather than institutional

self-preservation and advancement.

Big Difference

This may sound like a good idea at rst,

but there are inherent differences between

the private and public (government) sectors

that hinder its successful adoption by

government.

Private rms have a clear objectiveto

maximize prots for shareholders. This

requires managing risks and planning for

the future. For example, a loan ofcers

job is to not only make loans but to ensurethat those loans are protable. They must

balance the risks of overly strict lending

standards against the risks of overly lax

ones. When government rushes in with

explicit and implicit guarantees, this

balancing task is distorted.

The problem with trying to adapt

business-like incentives to a government

agencys overall focus is . . . government.

Government cannot utilize market

mechanisms because it is a monopoly

by denition, and that creates incentives

unique to state actors. In government, the

distortion is built in.

Perverse incentives

Public Choice theory helps explain

the incentives faced by those workingin government. As Nobel Prize-winning

economist James Buchanan, one of the

founders of Public Choice, points out,

[T]here is no center of power where

an enlightened few can effectively

isolate themselves from constituency

pressures. In other words, actors within

the bureaucracy cannot operate away from

the political pressures of trying to

please politicians and the voters who

elect them. Thus, institutional self-

preservation wins out.

The governments clumsyresponse to the nancial crisis made

the shortcomings of state regulation

evident, but the problem is not new.

In fact this lesson should have been

learned during the savings and loan

(S&L) crisis of the 1980s and early

1990s. The Federal Savings and Loan

Insurance Corporation (FSLIC), which

was expanded greatly during that

crisis, ensured that smart money wa

attracted to poorly managed S&Ls willing

to offer high interest rates. The managers

of these S&Ls recognized their bankrupt

status, but they were being kept alive by a

government guarantee.

A government-guaranteed entity isnt

allowed to die until the government says it

can. Until that time (which rarely arrives),

the risks were transferred from the S&Ls

and the depositors to the taxpayer. Indeed

S&L management shifted from small-town

bankers to some of the worlds most, well

creative nanciers. As a colleague at the

time, Catherine England, noted, no system

Whatworksforbusinessshould

workforgovernment,right?

The governmentsclumsy response to thefinancial crisis made the

shortcomings of stateregulation evident, but the

problem is not new.

Not necessarily.


7/12

Camping at Liberty Summer SemiPhoto by Janet Neilson.

was better designed to attract

crooks, scalawags and sharp

dealers than the then-existing

regulatory structure.

resPonsiveto Politics

Why didnt regulators do their

duty? Because the FSLIC was more

responsive to its political leaders

than to nancial reality. House

Speaker Jim Wright (D-Texas)

argued zealously that Texas banks

were not insolvent but illiquid.

Sound familiar? Zombie S&Ls

stayed open far longer than they

should have, and the S&L crisis

was the resultwith over 1,000

failed institutions and an estimated

cost to taxpayers of $124 billion.Do Tung and Henderson

believe regulators would have

done a better job if their rewards

for doing so had been greater? The

rewards of government service are

not necessarily economic. Avoiding

trouble with lawmakers is a strong

motivation on its own. So when

asked to solve zombie S&Ls

illiquidity, regulators could be

counted on to bend to political

pressure.

Jim Wright left Congress manyyears ago, but his successors are

doing as much damage today. The

bureaucrats enforcing the slew

of new regulationsfrom Dodd-

Frank to Obamacare to CAFE

on steroidswill face the same

incentives as did the staffers at the

FSLIC.

Markets work by rewarding

the success of individuals who, at

their own risk, venture forth and

succeedwhether by brilliance or

luckin fullling unmet consumer

needs. Bureaucrats, by contrast, are

risk-averse and respond to political

incentives. No bonus for making

the right decision can change that.

Fred L. Smith, Jr. (fsmith@cei.

org) is President and Founder of

CEI. Jacqueline Ottois a former

Research Associate at CEI. A

version of this article originally

appeared in The Freeman.

WWW.CEI.ORG


t , bc f d v o, o, dk i f lsd ly ss (lss) ly vf us d Cd

c g c cgd ft bc gf y vd fd c

t y cy xcg, cg ff lss cc vcy bc f c cc c Jk fy y cc cfc c,d dd f fy ckg dcd d b fd f y d d, d d dc d c d c

c f

t ag v fd c y lc rd, d f Fd f ecc edc; n ad, vg f b Cg; J G, vc d f mecc i; d v k

my fv f cy c Cei b bd i cg d ck ac w k ggffd ck d f d gd cd d f c cd f

w fy g d g g dd

q: w y gg? h g y Cd? ay gg yg cy? a d g, kgck , kd d g qg fd y c

sy , d, b i j d y gy f g ck

w, y cdoes v f g ck, d f , cdg vy zzy ejy Cdg Cei gv y CpaC s, v gv d gv

G bcc


8/12


WWW.CEI.ORG

On September 21, CEI held an award ceremony to recognizeMembers of the House of Representatives who, in their votingrecords, have stood up for workers rights and against job-killing

regulations. Representatives who earned a 100-percent pro-worker

score on the Workplacechoice.org labor scorecard received the

award. The score is calculated and updated by CEI labor policy

analysts after each congressional vote on a workers rights issue.

Twenty-fve Congressmen attended the event. Rep. Steve King

(IA) thanked CEI for recognizing his and his colleagues efforts to

create jobs: CEI understands this, and I am honored to receive their

award for compiling a 100%

pro-worker voting record. I will

continue to work to repeal job-

killing regulations, like those

established under the Davis-Bacon

Act, so that the government will

get out of the way of workers

looking for jobs. Twelve of the

Representatives being recognized

announced the award in press

releases of their own.

cei thanks

Pro-Workr

a crmony

congrssmn

19 20 21 22

13 14 15

8 9

4


9/12WWW.CEI.ORG


1. Rep. Robert Aderholt(R-Alabama)

2. Rep. Rick Berg(R-North Dakota)

3. Rep. Diane Black

(R-Tennessee)4. Rep. Kevin Brady(R-Texas)

5. Rep. Paul Broun(R-Georgia)

6. Rep. Michael Burgess(R-Texas)

7. Rep. John Campbell(R-California)

8. Rep. Howard Coble(R-North Carolina)

9. Rep. Jeff Denham(R-California)

10. Rep. John Fleming(R-Louisiana)

11. Rep. Bill Flores(R-Texas)

12. Rep. Phil Gingrey(R-Georgia)

13. Rep. Paul Gosar(R-Arizona)

14. Rep. Tom Graves(R-Georgia)

15. Rep. Morgan Grifth(R-Virginia)

16. Rep. Frank Guinta(R-New Hampshire)

17. Rep. Doc Hastings(R-Washington)

18. Rep. Tim Huelskamp(R-Kansas)

19. Rep. Jack Kingston(R-Georgia)

20. Rep. Jeffrey Landry(R-Louisiana)

21. Rep. Robert Latta(R-Ohio)

22. Rep. Kenny Marchant(R-Texas)

23. Rep. Mike Pompeo(R-Kansas)

24. Rep. Scott Tipton(R-Colorado)

25. Rep. Robert Wittman(R-Virginia)3 24 25

6 17 18

0 11 12

6 7

2 3


10/12


WWW.CEI.ORG

THE BAD

Abstract Patent ProcessThreatens Innovation

The Supreme Court will hear a

case in December brought by aMayo Clinic subsidiary challengingtwo patents on diagnosticprocesses that consist of observingcorrelations between blood testresults and patient health. Inmid-September, CEI, the ReasonFoundation, and the Cato Instituteled a joint amici briefsupportingthe petitioners. The issue at stake iswhether patents should be allowedto monopolize basic observationsof the way varying the dose ofa medicine affects a patientsresponse. Adjusting the dose ofdrug to get optimal results is aroutine medical practice doctorsuse in treating their patients,say the Mayo Clinic petitioners.Giving anyone the right to preventdoctors from observing those basicfacts of nature would send medicalpractice back to the stone age,said Ryan Radia, associate directorof CEIs Center for Technology and

Innovation. It would stie medicalinnovation and prevent doctorsfrom giving the best possible careto their patients.

THE GOOD

CEI Praises ObamasReview of Sarbanes-Oxley

On September 8, President

Obama delivered a speechbefore Congress in which heintroduced his American JobsAct and urged legislators topass it. CEI scholars criticizedthe expensive proposal andoffered their own Ten-PointPlan to Create Jobs hoursbefore the address. However,one surprising aspect ofthe presidents otherwiseunimpressive speech was hiscall to review misguided anddestructive nancial regulations.Passed in the wake of the Enroncollapse in 2002, Sarbanes-Oxley has long been criticizedby nancial experts for retardingeconomic growth. John Berlau,director of CEIs Center forInvestors and Entrepreneurs,welcomed the presidentsproposal. Politically, if Obamawanted to scale back or repeala big regulation, this would

be an excellent candidate,said Berlau. The law wassigned by George W. Bush andRepublicans foolishly nevertook the opportunity to relaxor repeal it when they were inpower. Thus, Obama does nothave to go back on legislationhe supported and can eventriangulate to the right of theBush administration.

THE UGLY

Misguided E-VerifyMandate Would Destroy

Jobs, Freeze Labor Market

On September 21, the HouseJudiciary Committee passedthe Legal Workforce Act (H.R.2885), which mandates useof the electronic employmenteligibility verication systemknown as E-Verify for allAmericans. The law is nowon its ways to the HouseFloor. If the Legal WorkforceAct actually becomes law,American workers and

employers will be thrust intoa bureaucratic nightmare thatwill slow economic growth,said CEI Immigration PolicyAnalyst Alex Nowrasteh.Americans should not haveto ask permission from thefederal government to work.Mandatory E-Verify hasalready been tried at thestate level in Arizonawithdire consequences. Employersthere are hiring off the books

in record numbers and jobgrowth lags behind the restof the nation partly becauseof E-Verifys regulatory tax.American workers and smallbusinessmen cannot affordto be bled dry by E-Verify,warned Nowrasteh.


11/12

MediaMENTIONS

WWW.CEI.ORG


Vice President for Policy Wayne Crews

argues that deregulation will create jobs

and reduce spending, unlike PresidentObamas American Jobs Act:

Our scal budgetary process fails to

streamline spending in any direction but

up. Nonetheless, we need a budget for off-

the-books regulation. After all, we have to

start somewhere.

Many have noted with increasing alarm

that regulations cost more than $1 trillion

annually, with more nancial, health and

environmental regulations spewing forth

as you read these words. Compliance costs

are equivalent to the entire scal budget

of the 1990sand rising. The presidentwas forced to delay implementation of

Environmental Protection Agency ozone

rules just last week.

Regulations are a desperate drag on

jobs now and have to be tracked and

reduced.

- September 7, The Washington Times

Labor Policy Counsel Vincent Vernuccio

and Policy Analyst Trey Kovacs present

the Big Labor vs. Taxpayers Index:

Until recently, union bossesnot

elected representativeshave been incontrol of the government employee

compensation process. Using taxpayer

dollars they obtain through mandatory

dues, they elect the management they

later negotiate with. However, across the

country in states such as Wisconsin, Ohio,

and Michigan, taxpayers are ghting back

and the tide of Big Labor control is starting

to change.

Now there is a new online tool to

give taxpayers and policy makers critical

information on which states favor Big

Labor. The Competitive EnterpriseInstitute and Crossroads GPS recently

launched a Big Labor versus Taxpayer

Index that analyzes 1,150 labor laws and

regulations throughout the country and

exposes states that make coddling Big

Labor a top priority.

- August 31, BigGovernment.com

Senior Fellow

Marlo Lewis

advises presidentialcandidates to push

for scaling back

the Environmental

Protection Agency:

GOP presidential

candidates should emphasize that reining

in the EPA is a constitutional imperative.

Yes, Americans are worried about jobs

and the economy, but arguing from

constitutional principle immediately puts

you on the moral high ground.

Which constitutional precepts

are relevant here? Only the peoplesrepresentatives, not non-elected

bureaucrats, should have the power to

decide national policy. Legislative intent,

not semantic cleverness, should determine

the extent of an agencys power. No one

should be judge of his own cause.

The EPA today is legislating climate

policy under the guise of implementing

a statute, the Clean Air Act, enacted in

1970, years before global warming was

even a gleam in Al Gores eye. This is

an egregious breach of the separation of

powers. The claim that Congress gave EPA

such expansive powers in 1970 but just

forgot to tell anybody is absurd.

- August 25, The New York Times

Room for Debate blog

CEI President Fred Smith explains

why Standard & Poors downgraded

Americas credit rating:

S&P realizes it must provide reliable

information on how it sees Americas

nancial issues if its reputation is to

survive. What it sees isnt pretty: a nation

with slow growth, crippling regulations,

burdensome tax policies, and ever-

expanding entitlement and other spending

programs. On top of that, we have a budget

deal that only addresses these problems

at the margins, a Republican House

reluctant to take on politically sensitive

entitlement reform, a Democratic Senate

unwilling even to discuss such reform, and

a president running for reelection on a

soak-the-rich platform.

The ruling class isnt eager for

Cassandras telling them that their

spending binge cannot go on much

longer, yet that is precisely what they

needto hear. The last thing we needis Pollyannas to lull the Washington

political class back into its usual stupor

For that reason, the S&P downgrade

offers actual hope.

- August 17,Forbe

Assistant Director of the Center for

Energy and the Environment William

Yeatman argues that President Obama

is prioritizing an environmentalist

agenda over his promise to create jobs:

President Obama claims to see the

need to create jobs at this time of endless9-plus percent unemploymentyet his

administration continues to relentlessly

destroy jobs for ideological reasons.

The best example may be the Obama

Environmental Protection Agencys war

on coal.

The EPAs regulatory crusade directly

threatens hundreds of thousands of jobs

and rolling blackouts that threaten even

more.

Start with a proposed regulation

under the Clean Air Act thats set to

be nalized in November. The Utility

MACT (Maximum Achievable Control

Technology) rule seeks to cut U.S. power

plants emissions of mercury from 29 tons

a year to just ve. Yet EPA itself estimates

that cutting even as much as 41 tons out o

total emissions of 105 tons is unlikely to

substantially affect total risk.

For zero benet, the Utility MACT

is one of the most expensive federal

regulations ever. In comments submitted

to the EPA, Unions for Jobs and the

Environment, an alliance of unionsrepresenting more than 3.2 million

workers, estimated that this needless

regulation would jeopardize 251,000 jobs

- August 9, The New York Po

Compiled byNicole Ciandella


12/12


nrft orgus ptge

paidpert 425

sther, md

Occupy Wall Street Activists

Demand Something?

In late September, several

hundred left-wing activists

converged on Lower Manhattan

to protest the existence of the U.S.

nancial sector. Rather than focusing

on pro-bailout corporatist politics,

which certainly deserve harsh

criticism, many of the protesters

zeroed in on markets themselves

and other, er, issues. One placardsighted near the New York Stock

Exchange read, Even if the World

Were to End Tomorrow Id Still

Plant a Tree Today. When asked

for specics on the goals of the movement by aNew York Times

reporter, John McKibben of Vermont answered, I want to get rid

of the combustion engine. Another protestor, Becky Wartell of

Maine, responded a bit more realistically, admitting, I want to

create spectacles. Needless to say, business has been operating as

usual in Americas nance capital.

British Safety Organization Pushes Fire Extinguisher Ban

In the United States, government regulations describe intedious detail the permissible procurement, placement, and use

of re extinguishers. But on the other side of the Atlantic, Britain

has taken an odd take on the overrergulation of handheld re

suppressors. The Orwellian-named Royal Society for the Prevention

of Accidents has been issuing warnings to high-rise apartment

managers, advising them to remove all re extinguishers from their

buildings. One resident explained the Societys intentions: They

are worried we will point them in the wrong direction or use the

wrong extinguishers. But if you are trapped in a burning building,

you will work out how to use one. Apparently, to the Royal Society

for the Prevention of Accidents, the risks of re extinguisher misuse

outweigh the risks of burning to death.

California Legislators Seek to Outlaw

Babysitting

Facing a tidal wave of scal

pressure thanks to years of government

mismanagement, California legislators

still have time to focus on real threats to

society: babysitting. The proposed bill

was described by critical California state

Senator Doug LaMalfa: Under AB 889,

household employers (aka parents)

who hire a babysitter on a Friday night

will be legally obligated to pay at leastminimum wage to any sitter over the age

18 (unless it is a family member), provide

a substitute caregiver every two hours to

cover rest and meal breaks, in addition to

workers compensation coverage, overtime pay, and a meticulous

calculated timecard/paycheck. While presumably well intention

the bill would make most babysitting as we currently know it

illegal. This would further worsen youth unemployment, which

currently hovers above 50 percent, and keep young parents from

enjoying much needed nights out.

Government Auditors: DOJ Spent $16 Per Mufn

In 2009, the Justice Departments Executive Ofce forImmigration Review held a legal training conference at a Hilton hot

in Washington. Breakfast was, of course, catered, as is the case for

most conferences. However, what the ofce paid might surprise you

$4,200 for 250 assorted mufns-which works out to $16.80 each.

Hilton representatives claim this price included coffee, juice, fruit, an

tax. But if true, the DOJ still approved an invoice listing mufns a

$16.80 each. The departments inspector general unearthed some oth

unsavory food service gures. Conference organizers in San Francis

spent $76 per person on lunch and coffee at $8.24 a cup. This is not

the rst time the Justice Department has wound up with egg on its fa

over excessive catering costs. A 2007 audit revealed that the top law

enforcement agency had served Swedish meatballs priced at $5 each

1899 L Street, NW, 12th FloorWashington, DC 20036

...END

NOTES

CEI Planet - September-October 2011

Documents